BILL NUMBER: AB 2875	CHAPTERED  07/07/00

	CHAPTER   99
	FILED WITH SECRETARY OF STATE   JULY 7, 2000
	APPROVED BY GOVERNOR   JULY 6, 2000
	PASSED THE SENATE   JUNE 15, 2000
	PASSED THE ASSEMBLY   JUNE 15, 2000
	AMENDED IN SENATE   JUNE 15, 2000
	AMENDED IN ASSEMBLY   MAY 25, 2000

INTRODUCED BY   Assembly Member Cedillo
   (Principal coauthor:  Senator Alarcon)
   (Coauthors:  Assembly Members Alquist, Aroner, Cardoza, Corbett,
Correa, Davis, Ducheny, Dutra, Hertzberg, Honda, Jackson, Keeley,
Kuehl, Longville, Lowenthal, Mazzoni, Romero, Shelley, Steinberg,
Strom-Martin, Thomson, Torlakson, Villaraigosa, Vincent, Washington,
Wiggins, and Wildman)

                        MARCH 6, 2000

   An act to amend Section 15438 of, and to add Section 15438.6 to,
the Government Code, and to add Section 1204.4 to the Health and
Safety Code, relating to health.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2875, Cedillo.   Primary care clinics: grants.
   Existing law authorizes the California Health Facilities Financing
Authority to perform various functions with respect to the financing
of projects of health facilities that are operated by a city,
county, city and county, district hospital, or private, nonprofit
corporation or association.
   This bill would enact the Cedillo-Alarcon Community Care
Investment Act of 2000, that would authorize the authority to award
grants to any eligible participating primary care clinic for purposes
of financing capital outlay projects.  It would require the
authority to develop selection criteria and a process for awarding
these grants.
   The bill would also authorize the authority to request information
from the State Department of Health Services regarding grant
applicants for purposes of evaluating these applications, and would
require the department to comply with these requests.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 15438 of the Government Code is amended to
read:
   15438.  Subject to the conditions, restrictions, and limitations
of Section 15438.1, the authority may do any of the following:
   (a) Adopt bylaws for the regulation of its affairs and the conduct
of its business.
   (b) Adopt an official seal.
   (c) Sue and be sued in its own name.
   (d) Receive and accept from any agency of the United States or any
agency of the State of California or any municipality, county or
other political subdivision thereof, or from any individual,
association, or corporation gifts, grants, or donations of moneys for
achieving any of the purposes of this chapter.
   (e) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out the
purposes of this part.
   (f) Determine the location and character of any project to be
financed under this part, and to acquire, construct, enlarge,
remodel, renovate, alter, improve, furnish, equip, fund, finance,
own, maintain, manage, repair, operate, lease as lessee or lessor and
regulate the same, to enter into contracts for any or all of those
purposes, to enter into contracts for the management and operation of
a project or other health facilities owned by the authority, and to
designate a participating health institution as its agent to
determine the location and character of a project undertaken by that
participating health institution under this chapter and as the agent
of the authority, to acquire, construct, enlarge, remodel, renovate,
alter, improve, furnish, equip, own, maintain, manage, repair,
operate, lease as lessee or lessor and regulate the same, and as the
agent of the authority, to enter into contracts for any or all of
those purposes, including contracts for the management and operation
of that project or other health facilities owned by the authority.
   (g) Acquire, directly or by and through a participating health
institution as its agent, by purchase solely from funds provided
under the authority of this part, or by gift or devise, and to sell,
by installment sale or otherwise, any lands, structures, real or
personal property, rights, rights-of-way, franchises, easements, and
other interests in lands, including lands lying under water and
riparian rights, which are located within the state the authority
determines necessary or convenient for the acquisition, construction,
or financing of a health facility or the acquisition, construction,
financing, or operation of a project, upon the terms and at the
prices considered by the authority to be reasonable and which can be
agreed upon between the authority and the owner thereof, and to take
title thereto in the name of the authority or in the name of a
participating health institution as its agent.
   (h) Receive and accept from any source loans, contributions, or
grants for, or in aid of, the construction, financing, or refinancing
of a project or any portion of a project in money, property, labor,
or other things of value.
   (i) Make secured or unsecured loans to, or purchase secured or
unsecured loans of, any participating health institution in
connection with the financing of a project or working capital in
accordance with an agreement between the authority and the
participating health institution.  However, no loan to finance a
project shall exceed the total cost of the project, as determined by
the participating health institution and approved by the authority.
Funds for secured loans may be provided from the California Health
Facilities Financing Fund pursuant to subdivision (b) of Section
15439 to small or rural health facilities pursuant to authority
guidelines.
   (j) Make secured or unsecured loans to, or purchase secured or
unsecured loans of, any participating health institution in
accordance with an agreement between the authority and the
participating health institution to refinance indebtedness incurred
by that participating health institution in connection with projects
undertaken or for health facilities acquired or for working capital
financed prior to or after January 1, 1980.  Funds for secured loans
may be provided from the California Health Facilities Financing Fund
pursuant to subdivision (b) of Section 15439 to small or rural health
facilities pursuant to authority guidelines.
   (k) Mortgage all or any portion of interest of the authority in a
project or other health facilities and the property on which that
project or other health facilities are located, whether owned or
thereafter acquired, including the granting of a security interest in
any property, tangible or intangible, and to assign or pledge all or
any portion of the interests of the authority in mortgages, deeds of
trust, indentures of mortgage or trust or similar instruments,
notes, and security interests in property, tangible or intangible, of
participating health institutions to which the authority has made
loans, and the revenues therefrom, including payments or income from
any thereof owned or held by the authority, for the benefit of the
holders of bonds issued to finance the project or health facilities
or issued to refund or refinance outstanding indebtedness of
participating health institutions as permitted by this part.
   (l) Lease to a participating health institution the project being
financed or other health facilities conveyed to the authority in
connection with that financing, upon the terms and conditions the
authority determines proper, and to charge and collect rents therefor
and to terminate the lease upon the failure of the lessee to comply
with any of the obligations of the lease; and to include in that
lease, if desired, provisions granting the lessee options to renew
the term of the lease for the period or periods and at the rent, as
determined by the authority, to purchase any or all of the health
facilities or that upon payment of all of the indebtedness incurred
by the authority for the financing of that project or health
facilities or for refunding outstanding indebtedness of a
participating health institution, then the authority may convey any
or all of the project or the other health facilities to the lessee or
lessees thereof with or without consideration.
   (m) Charge and equitably apportion among participating health
institutions, the administrative costs and expenses incurred by the
authority in the exercise of the powers and duties conferred by this
part.
   (n) Obtain, or aid in obtaining, from any department or agency of
the United States or of the State of California or any private
company, any insurance or guarantee as to, or of, or for the payment
or repayment of, interest or principal, or both, or any part thereof,
on any loan, lease, or obligation, or any instrument evidencing or
securing the loan, lease, or obligation, made or entered into
pursuant to this part; and notwithstanding any other provisions of
this part, to enter into any agreement, contract, or any other
instrument whatsoever with respect to that insurance or guarantee, to
accept payment in the manner and form as provided therein in the
event of default by a participating health institution, and to assign
that insurance or guarantee as security for the authority's bonds.
   (o) Enter into any and all agreements or contracts, including
agreements for liquidity and credit enhancement, interest rate swaps
or hedges, execute any and all instruments, and do and perform any
and all acts or things necessary, convenient, or desirable for the
purposes of the authority or to carry out any power expressly granted
by this part.
   (p) Invest any moneys held in reserve or sinking funds, or any
moneys not required for immediate use or disbursement, at the
discretion of the authority, in any obligations authorized by the
resolution authorizing the issuance of the bonds secured thereof or
authorized by law for the investment of trust funds in the custody of
the Treasurer.
   (q) Establish and maintain a reciprocal insurance company or an
insurance program that shall be treated and licensed as a reciprocal
insurance company for regulatory purposes under the Insurance Code on
behalf of one or more participating health institutions, to provide
for payment of judgments, settlement of claims, expense, loss and
damage that arises, or is claimed to have arisen, from any act or
omission of, or attributable to, the participating health institution
or any nonprofit organization controlled by, or controlling or under
common control with, the participating health institution, their
employees, agents or others for whom they may be held responsible, in
connection with any liability insurance (including medical
malpractice); set premiums, ascertain loss experience and expenses
and determine credits, refunds, and assessments; and establish limits
and terms of coverage; and engage any expert or consultant it deems
necessary or appropriate to manage or otherwise assist with the
insurance company or program; and pay any expenses in connection
therewith; and contract with the participating health institution or
institutions for insurance coverage from the insurance company or
program and for the payment of any expenses in connection therewith
including any bonds issued to fund or finance the insurance company
or program.
   (r) Provide funding for self-insurance for participating health
institutions.  However, there shall be no pooling of liability risk
among participating health institutions except as provided in
subdivision (f) of Section 15438.5.
   (s) (1) Make grants-in-aid to any participating small or rural
hospital, as defined in Section 124840 of the Health and Safety Code,
in connection with the financing of a project or for working capital
in accordance with an agreement between the authority and the
hospital.  However, no grant to finance a project shall exceed the
total cost of the project, as determined by the hospital and approved
by the authority.
   (2) Make grants-in-aid to any small or rural hospital, as defined
in Section 124840 of the Health and Safety Code, in accordance with
an agreement between the authority and the hospital to discharge
indebtedness incurred by the hospital in connection with projects
undertaken, for health facilities acquired, or for working capital
financed prior to the effective date of this subdivision.
   (3) Grants shall be made pursuant to this subdivision only from
HELP Program funds, not to exceed eight hundred seventy thousand
dollars ($870,000).  In consultation with representatives of the
hospital industry and other affected parties, the authority shall
develop a process and criteria for making grants under this
subdivision, including obtaining legal opinions on appropriateness of
grants to private facilities for capital outlay purposes.
   (t) Award grants to any eligible clinic pursuant to Section
15438.6.
  SEC. 2.  Section 15438.6 is added to the Government Code, to read:

   15438.6.  (a) This section shall be known, and may be cited, as
the Cedillo-Alarcon Community Clinic Investment Act of 2000.
   (b) The Legislature finds and declares all of the following:
   (1) Primary care clinics require a one-time outlay for capital in
order to continuously perform their vital role.  Many primary care
clinics are currently at capacity and in order to increase access to
their services and allow them to expand to cover the growing need for
health care for the vulnerable populations in California, these
capital funds are necessary.
   (2) Primary care clinics are the health care safety net for the
most vulnerable populations in California:  uninsured, underinsured,
indigent, and those in shortage designation areas.  Primary care
clinics provide health care regardless of the ability to pay for
services.
   (3) Approximately 7.4 million Californians lack health insurance,
a number that increases by 50,000 per month.
   (4) Primary care clinics have been historically and woefully
underfunded.
   (5) Primary care clinics are the most cost-effective means of
serving California's vulnerable populations.
   (6) The failure to adequately fund primary care clinics has
resulted in significant costs to the state in the form of unnecessary
emergency room visits.  Also, the lack of preventive care results in
significant costs when patients become severely ill.
   (c) The authority may award grants to any eligible clinic, as
defined in subdivision (a) of Section 1204 and subdivision (c) of
Section 1206 of the Health and Safety Code, for purposes of financing
capital outlay projects, as defined in subdivision (f) of Section
15432.
   (d) The authority, in consultation with representatives of primary
care clinics and other appropriate parties, shall develop selection
criteria and a process for awarding grants under this section.  The
authority may take into account at least the following factors when
selecting recipients and determining amount of grants:
   (1) The percentage of total expenditures attributable to
uncompensated care provided by an applicant.
   (2) The extent to which the grant will contribute toward expansion
of health care access by indigent, underserved, and uninsured
populations.
   (3) The need for the grant based on an applicant's total net
assets, relative to net assets of other applicants.  For purposes of
this section, "total net assets" means the amount of total assets
minus total liabilities, as disclosed in an audited financial
statement prepared according to United States Generally Accepted
Accounting Principles, and shall include unrestricted net assets,
temporarily restricted net assets, and permanently restricted net
assets.
   (4) The geographic location of the applicant, in order to maximize
broad geographic distribution of funding.
   (5) Demonstration by the applicant of project readiness and
feasibility to the authority's satisfaction.
   (6) The total amount of funds appropriated and available for
purposes of this section.
   (e) No grant to any clinic facility shall exceed two hundred fifty
thousand dollars ($250,000).
   (f) In no event shall a grant to finance a project exceed the
total cost of the project, as determined by the clinic and approved
by the authority.  Grants shall be awarded only to clinics that have
certified to the authority that all requirements established by the
authority for grantees have been met.
   (g) All projects that are awarded grants shall be completed within
a reasonable period of time, to be determined by the authority.  No
funds shall be released by the authority until the applicant
demonstrates project readiness to the authority's satisfaction.  If
the authority determines that the clinic has failed to complete the
project under the terms specified in awarding the grant, the
authority may require remedies, including the return of all or a
portion of the grant.  Certification of project completion shall be
submitted to the authority by any clinic receiving a grant under this
section.
   (h) Any clinic receiving a grant under this section shall commit
to using the health facility for the purposes for which the grant was
awarded for the duration of the expected life of the project.
   (i) Upon disbursement of all grant funds, the authority shall
report to the Joint Legislative Budget Committee on the recipients of
grants, the total amount of each grant, and the purpose for which
each grant was awarded.
   (j) (1) This section shall be implemented only to the extent that
funds are appropriated for this purpose in the Budget Act of 2000.
   (2) It is the intent of the Legislature that this section be
financed by the enactment of another measure containing a one-time
lump-sum appropriation of fifty million dollars ($50,000,000) from
the General Fund to the California Health Facilities Financing
Authority.
   (3) It is the intent of the Legislature that the California Health
Facilities Financing Authority be reimbursed for the costs of the
administration of the implementation of this section from the
appropriation specified in paragraph (2).
  SEC. 3.  Section 1204.4 is added to the Health and Safety Code, to
read:
   1204.4.  The State Department of Health Services shall provide
information to the California Health Facilities Financing Authority
with respect to primary care clinic grant applicants for capital
outlay projects as specified in Section 15438.6 of the Government
Code.
